Newsagents Association of NSW and Act Ltd v John Fairfax Publications Pty Limited [2006] NSWIRComm 409 (28 December 2006)

Last Updated: 18 April 2007

NEW SOUTH WALES INDUSTRIAL RELATIONS COMMISSION

CITATION : Newsagents Association of NSW and ACT Ltd v John Fairfax Publications Pty Limited [2006] NSWIRComm 409



FILE NUMBER(S): IRC 3661

HEARING DATE(S): 21/12/2006

DECISION DATE: 28/12/2006
PARTIES:
APPLICANT:
Newsagents Association of NSW and ACT Ltd

RESPONDENT:
John Fairfax Publications Pty Limited

JUDGMENT OF: Wright J President


LEGAL REPRESENTATIVES

APPLICANT:
Mr I Neil SC and Mr D Chin of counsel
W G McNally Jones Staff, solicitors
(Mr N Keats)
RESPONDENT:
Mr H Dixon SC
Mallesons Stephen Jaques, solicitors
(Mr A Gray)

CASES CITED: Birrell v Australian National Airlines Commission (1984) 5 FCR 447
Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148
Elliott v Royal Motor Yacht Club of New South Wales, Newcastle Branch (1988) 42 IR 35
Gough & Gilmour Holdings Pty Ltd v Caterpillar of Australia Ltd (No 9) [2001] NSWIRComm 260
Howitt v Retec Limited (No 2) (1995) 60 IR 93
Kenoss Contractors Pty Ltd v Allied Constructions Pty Limited (2001) 104 IR 66
R v Dunphy and ors; Ex parte Maynes and ors (1978) 139 CLR 482
Sea Acres Rainforest Centre Pty Ltd v New South Wales (2001) 109 IR 56
Selman v Sweet [2003] NSWIRComm 14
Sweeney & Vandeleur Pty Ltd v Angyl (2003) 136 IR 433
TAB Agents' Association of NSW v TAB Limited [2003] NSWIRComm 316
Western Sydney Area Health Service v Australian Salaried Medical Officers' Federation (NSW) (2004) 138 IR 203

LEGISLATION CITED: Conciliation and Arbitration Act 1904 (Cth) s 140 (repealed)
Industrial Arbitration Act 1940 s 88F (repealed)
Industrial Relations Act 1996 s 105 s 106 s 108 s 109 s 217



JUDGMENT:

INDUSTRIAL COURT OF NEW SOUTH WALES

CORAM: WRIGHT J, President

Thursday 28 December 2006

Matter No IRC 3661 of 2006

NEWSAGENTS ASSOCIATION OF NSW AND ACT LTD v JOHN FAIRFAX PUBLICATIONS PTY LIMITED

Application under section 106 of the Industrial Relations Act 1996

JUDGMENT
[2006] NSWIRComm 409

1 On 14 December 2006 the applicant, the Newsagents Association of NSW and ACT Ltd, commenced proceedings against the respondent, John Fairfax Publications Pty Limited, pursuant to s 106 of the Industrial Relations Act 1996 (the respondent will be referred to variously as "Fairfax" or "the respondent"). The proceedings concerned a member of the applicant, Mr David Boag, and sought, inter alia, a declaration that the contract, arrangements and/or any related condition or collateral arrangements made between Mr Boag and the respondent on or about 1 February 2000, including the three written agreements made between Mr Boag and the respondent on or about 1 February 2000, whereby Mr Boag performed work in an industry in New South Wales is, or in the alternative is part of, an unfair contract within the meaning of ss 105 and 106 of the Act.

2 The application recites that the applicant is a separate organisation registered pursuant to s 217(1)(c) of the Industrial Relations Act and is registered as an industrial organisation of employers under Part 3 of Chapter 5 of the Act; that it has members, including Mr Boag, who employ persons working in the newsagency and newspaper distribution industry to which the agreements, the subject of the proceedings, relate; and that it may apply for orders pursuant to s 108(c) of the Act.

3 At the time the proceedings were commenced they were accompanied by a letter from the applicant's solicitors requesting that the matter be listed for hearing of the applicant's interlocutory application on the following day, Friday 15 December 2006 "lest the applicant's rights be rendered nugatory by the effluxion of time". Accordingly the matter came before Haylen J on 15 December to deal with the application for interlocutory relief. At that time and after some preliminary debate and an adjournment when the parties considered their respective situations, the parties announced that an agreement had been reached between them, including between the respondent and Mr Boag as to the interim disposition of the interlocutory application. The agreement in substance involved an agreement that the notice of termination of the three agreements between Fairfax and Mr Boag would be extended to midnight on Thursday 21 December 2006, subject to certain terms, including an undertaking as to damages. The parties also advised the Court that the most suitable day for the hearing of the interlocutory application was Thursday 21 December.

4 The matter accordingly came before me as duty judge on 21 December when the parties tendered evidence and made submissions as to the interlocutory application. At the time the applicant amended its application for interlocutory relief to the following:

1. The Respondent be restrained pending final determination of the proceedings, or until further order of this honourable Court, from:

(a) terminating, or giving effect to or acting in any way on any notice of termination of, the Specialist Newsagent Agreement, the Retail Distributor Agreement and the Home Distributor Agreement (“the Agreements”) made between the Respondent and a member of the Applicant, Mr David Boag, on or about 1 February 2000; and

(b) otherwise treating any and each of the Agreements as though they have been terminated.

1A. Further, an order varying the Agreements pending final determination of the proceedings so as to provide that the period of notice required for early termination of the Agreements without cause after 1 February 2004 shall be extended beyond 21 December 2006 for a period that shall continue until further order of this honourable Court.

Prayer 1A was added by the amendment to deal with a jurisdictional issue the applicant apprehended was to be raised by the respondent.

5 The applicant was represented by Mr I Neil SC and Mr D Chin of counsel and the respondent by Mr H Dixon SC. At the hearing the applicant read two affidavits of David Boag: the first being the affidavit of urgency sworn on 14 December 2006 and the second being Mr Boag's affidavit sworn on 20 December 2006. The respondent read one affidavit being the affidavit of Len Jordan sworn 21 December 2006. Mr Jordan is employed by the respondent as its Director, Circulation Network Development, and has carried out this role since November 2005. He has worked with the respondent for 33 years and during that time has held a number of senior roles within the respondent's circulation operation. His current responsibilities include responsibilities for the newsagency network in New South Wales and the ACT and he has had this responsibility for several years. As part of this role, Mr Jordan also has responsibility for oversight of the performance of contracts with newsagents appointed as agents to sell and distribute Fairfax publications; he is also responsible for developing the future of the network in New South Wales.

Chronology of relevant background matters

6 A significant portion of the chronology of events relevant to the present proceedings is to be found in the following extract from Mr Jordan's evidence (annexures or exhibits have not been reproduced):

6 Up until 1998, the newsagency industry in New South Wales acted as one body under an authorised system. Accordingly, there was a governing Newsagency Council of which Fairfax was a member, along with News Ltd, Australian Consolidated Press (ACP), the Newsagents Association of NSW and the ACT (NANA) and Newsagent Direct Distribution (NDD).

7 On 18 November 1998, under the Trade Practices Act (1974) (Cth), the Trade Practices Tribunal (now called Australian Competition Tribunal) (“the Tribunal”) set aside the determination of the Australian Competition and Consumer Commission to grant substitute authorisations until February 2001 in relation to the newsagency distribution system in NSW/ACT, Queensland, South Australia and Victoria.

8 Following this decision, the Australian Competition Tribunal substituted an expedited timetable for the dismantling of the authorised newsagency system in the relevant States and Territories. This meant that the Newsagency Councils nationally (with the exception of Western Australia) had to cease to operate and each publisher had to enter into new individual contracts with newsagents in a gradual transition process.

9 In order to comply with the Tribunal’s decision, Fairfax developed a new framework for the distribution of Fairfax publications. An individual contract system was developed which was based on three main contracts. These were, (i) home distributor, (ii) retail distributor and (iii) Specialist Newsagent Contract for retailing (“the Contracts”). An existing authorised newsagent was offered all three contracts to allow transition to a deregulated environment. Fairfax also entered into into direct contracts with retail only operators (News Retailers) and sub-agents (General Retailers) so as to deal with the competition and servicing issues identified by the Tribunal.

10 In June 1999, myself and Robert Whitehead, the then Director of Group Publishing, issued notices to all our NSW newsagents, explaining our distribution proposal. Exhibited to me at the time of swearing this affidavit and marked ‘LJ1’ is a copy of this notice. The notice explained that Fairfax was currently in the process of briefing boards of newsagents’ associations, and that meetings with individual newsagents would be held to explain our plans further and give them the opportunity to make comment. An internet site was also set up where newsagents could email us to ask questions or could post any comments they had on the proposals.

11 Between May and October of 1999, myself, Robert Whitehead, Daryl Fedden, Circulation Director of ‘The Age’ and Gail Hambly, Fairfax General Legal Counsel, held meetings and discussions with the Australian Newsagents Federation (“ANF”) regulatory committee and with individual State Newsagency Associations. The purpose of these meetings was to discuss the terms of the proposed terms of the Contracts.

12 We also conducted a number of road shows to speak to individual newsagents and gain their comments and feedback regarding the proposed terms of the Contracts. This involved us travelling to various towns throughout the East Coast of Australia and presenting our proposal to newsagents at meetings. Exhibited to me at the time of swearing this affidavit and marked ‘LJ2’ is a copy of our presentation.

13 The ANF was legally represented throughout the course of our discussions with them regarding the Contracts and the negotiation of their terms.

14 Following these discussions and the road shows, the terms of the Contracts were further reviewed and when finalised, were sent out to individual newsagents on or around 1 February 2000. We requested newsagents to sign and return the contracts by 17 March 2000. Exhibited to me at the time of swearing this affidavit and marked ‘LJ3’ is a sample copy of the covering letter sent to each newsagent.

15 Under each of the Contracts, the initial term was for 5 years. The Contracts could be extended beyond that initial term, subject to the right of Fairfax to give 12 months notice of termination - It was written into the Contracts that this provision could not be exercised before 1 February 2004. Under the old contract system in NSW, authorised newsagents contracts could be terminated without notice. Our discussion with the ANF on the new contracts led us to change this to a 12 month notice period in the new contracts.

16 Separately, the Contracts permit Fairfax to give an agent one month’s notice of termination in the event that the agent has, amongst other things, committed three defaults in any 12 month period, or 5 defaults in any 3 year period. Generally, the defaults broadly correspond to performance criteria.

7 As to the contractual arrangements with Mr Boag, Mr Jordan said:

17 Mr David Boag (“Mr Boag”) owns and operates a newsagency located at 27 Botany Road, Waterloo, NSW. He operates as a sole trader and trades under the name of ‘Boag’s Newsagency’.

18 Mr Boag has had contractual arrangements with Fairfax for the retail sale and distribution of its products since in or around 1977.

19 Each newsagent who distributes for Fairfax is assigned a ‘territory’. Mr Boag’s territory is situated in Waterloo/Alexandria, Sydney.

20 Along with other newsagencies who sold or distributed Fairfax publications, Mr Boag was sent the Contracts on or around 1 February 2000. To the best of my knowledge, Mr Boag did not raise any issues or concerns about the Contracts at any stage. If he did raise any issues, this would have been noted on Mr Boag’s file. I have reviewed his file and it does not contain anything to that effect. He signed and returned the Contracts to us on or around 13 November 2000.

21 Fairfax does not maintain supply and distribution arrangements with every newsagent in the country. Fairfax maintains supply and distribution arrangements with newsagents that maximise its sales potential.

22 Mr Boag has advised Fairfax on more than one occasion that he does not want to take on new subscribers for Fairfax publications by asserting that his home delivery run is already too large. In addition, he has not, to my knowledge, appointed any new sub-agents in his territory in the last 5 years. This advice has been given to Fairfax as stated below.

8 By letter dated 16 December 2005 Fairfax gave Mr Boag notice of termination of the three agreements between them with effect from Monday 18 December 2006. This letter indicated that Mr Boag would cease to be entitled to sell or distribute Fairfax publications under those agreements from that date. The letter added:

We are, however, considering an appropriate form of retail arrangement under which we may decide to allow you to continue to supply Fairfax publications at your business premises. Among other factors, this assessment by Fairfax depends on the nature and type of your business and our evaluation of your performance over the term of your current Agreements.

We are providing this notice to you at this time under our Agreements, in order to provide you with long term notice of our changed arrangements with you, so that you have time to assess and organise your commercial arrangements.

We would like to ensure that this process for a change in distribution arrangements proceeds on good terms. If you have any questions in relation to this letter or the process, please contact us. We will contact you closer to the termination date to ensure an orderly transition of distribution arrangements and to discuss new retail arrangements (if applicable).

9 On 12 January 2006 Mr Boag met Wayne Couzins, the NSW Network Contracts Manager of the respondent and the signatory of the letter of 16 December 2005.

10 By letter dated 14 August 2006 Fairfax reminded Mr Boag of the correspondence of 16 December of the previous year giving him 12 months notice of the termination of his agreements with Fairfax. He was also reminded that as from Monday 18 December 2006 he would cease to be entitled to sell or distribute Fairfax publications under those agreements and that as of that date Fairfax would make alternative distribution arrangements in the relevant territory. The letter concluded with a request that Mr Boag contact Fairfax if he had any questions in relation to the letter.

11 By letter of 7 November 2006 Mr Boag sought to engage the dispute resolution process set out in each of the agreements with Fairfax.

12 Fairfax replied to that letter by letter dated 22 November 2006. The letter recited the terms of the three agreements which gave Fairfax the right to terminate them at any time after 1 February 2004 by giving 12 months' notice; also that Fairfax had given him notice on 16 December 2005 and that accordingly, the agreements would be terminated with effect from Monday 18 December 2006. The letter concluded on this note:

In any event, more than ten months have elapsed since Fairfax gave notice in accordance with its rights under the Agreements. Given Fairfax's unambiguous contractual rights, we do not see how a dispute can arise between the parties in relation to Fairfax's ability to give such a termination notice.

Accordingly, in Fairfax's view, the dispute resolution procedure in Schedule 4 of the Agreements does not apply.

13 It was clear that Fairfax did not regard the dispute resolution procedure as applying in the circumstances. Mr Boag's affidavit indicates that was his understanding of Fairfax's response.

14 Mr Couzins wrote to Mr Boag on 8 December 2006 confirming the existing arrangements with the newsagency would cease on 18 December 2006 and that Fairfax would make alternative distribution and retail arrangements within the territory. The letter added that should Mr Boag wish to apply for the supply of Fairfax publications on a General Retailer (Sub-agent) basis, a written application for supply on that basis should be directed to Mr Couzins' office. Mr Couzins also indicated that Fairfax required Mr Boag to provide Fairfax with the supply details for all sub-agents presently supplied by his newsagency, and a list of any "full-freight" home delivery customers to whom Mr Boag issued a delivery account (the term "full-freight" referring to home delivery customers whose delivery arrangements had been made with Mr Boag directly, rather than through Fairfax subscription arrangements).

15 On or about 11 December, Mr Couzins advised Mr Jordan that he had received a request "as general retailer or sub-agent" from Mr Boag, the request detailing Mr Boag's weekly requirements for Fairfax publications but that Mr Boag did not provide Fairfax with the information as to supply and home delivery that Fairfax had requested.

16 On Friday 15 December 2006 Mr Boag provided Mr Jordan with a list of people and businesses to which he distributed Fairfax products. Subsequently, on 21 December 2006, Mr Jordan repeated Fairfax's offer of a retail agreement to Mr Boag through Fairfax's solicitors, Mallesons Stephen Jaques.

The terms of the three contracts between Mr Boag and Fairfax

17 It is convenient at this stage to refer briefly to the nature and some of the terms of the three contracts between Mr Boag and Fairfax. The first agreement is entitled "Specialist Newsagent Agreement". The Agreement contains a short description of the subject matter of the Agreement and the work which is the subject of the Agreement. It is said that the Agreement applies to the sale of publications in a retail outlet by a retailer who holds both a Retail Distributor Agreement and a Home Distributor Agreement with Fairfax. The Agreement commenced on 1 February 2000 and was to continue until 31 December 2005. The Agreement also provided that if no notice of termination was given under the Agreement by 31 January 2005, "then this agreement will extend for further consecutive terms of 12 months each". Any extension of the Agreement was to be on the same terms as the Agreement except that the provision that the Agreement was to be terminated on 31 January 2005 was not to apply.

18 What was described as "early termination after 1 February 2004" was dealt with in clauses 1.4 and 1.5. These clauses provided that, notwithstanding the earlier provisions of the Agreement, Fairfax could terminate the Agreement from 1 February 2004 at any time without cause by giving at least 12 months' notice at any time to the Specialist Newsagent although such notice was not to be given before 1 February 2004. Clause 1.5 provided that the parties acknowledged that Fairfax had the rights of early termination as set out in Clause 1.4 and that Fairfax could exercise those rights due to changing circumstances as considered appropriate by it, and having regard to the annual review process referred to in clause 3.4 of the Agreement. Further, Fairfax was not able to provide any assurance and made no representation that the Agreement would be extended beyond 31 January 2005 when it expired. It was pursuant to clauses 1.4 and 1.5 that Fairfax gave the notice of 16 December 2005 to Mr Boag. Clause 5 contained extensive provisions providing for termination by Fairfax for cause.

19 Clause 8 (Sale or Assignment and Change in Control) prevented the Newsagent from selling or transferring the business without Fairfax's prior written consent. Clause 8.4 provided:

8.4 Fairfax has agreed to enter into this agreement on the basis that the Contact Person is directly and personally involved in the business and devotes their personal efforts to the business. If the Contact Person ceases to be a partner, director, joint venturer or shareholder of the Specialist Newsagent (as the case may be), the Specialist Newsagent must seek Fairfax's written consent to the replacement of that person, which consent will not be unreasonably withheld.

20 Clause 9.2 (Goodwill) provided:

9.2 This agreement does not confer upon the Specialist Newsagent nor will the assignment, transfer, novation or subcontracting of this agreement as part of the Specialist Newsagent's business in accordance with clause 8.1, confer upon such a purchaser or other party any right of property or goodwill in the business of the sale of Publications.

21 The other two Agreements were substantially in the same terms. The second Agreement was entitled "Retail Distributor Agreement" and stated that it "applies to the sale of Publications by the Retail Distributor to News Retailers, General Retailers and such other retailers as notified by Fairfax". The third Agreement was entitled "Home Distributor Agreement" and applied to the sale of publications by way of home delivery.

The contentions of the parties

22 Mr Boag, in support of the application for interlocutory relief, deposed that the respondent had taken no steps to engage the dispute resolution procedure in the three agreements and that he wanted to undertake that procedure in order to be told of and consider any changing circumstance and any aspect of the annual review process set out in the agreements that the respondent relied upon in terminating them.

23 He also indicated that apart from the meeting on 12 January 2006 he had received no explanation for the termination of the three contracts and that he wished to further negotiate with a view to either maintaining the present contractual relationship or appropriate alternative agreements to supply the respondent's publications as envisaged in the respondent's letter of 16 December 2005.

24 He also deposed:

I believe that should these three Agreements with the Respondent be terminated with affect from 18 December 2006 that I (and the partnership with my spouse) will suffer a reduction in revenue of approximately $1,500.00 per week; the goodwill in the business will be reduced and it will be significantly harder to sell the newsagency.

As of the date of the swearing of this affidavit no arrangements have been put in place to ensure that any newspapers or other publications of the Respondent are delivered to the Premises.

I estimate the commissions earned from the sale of the Respondent’s publications under the agreements referred to above is approximately 20% of the turnover of the business.

It is important for a newsagency to be able to offer all papers to the public. The loss of the ability to sell and distribute will affect the continuing viability of the newsagency. I am currently 67 years old and my wife is 62. At our ages we are contemplating retiring and selling the newsagency in the next five to ten years. The loss of these contracts will diminish any prospective return on sale of the newsagency.

(It appears that Mr Boag was in error as to what was said in the second of the above paragraphs - he appears to have forgotten or overlooked the events described in para [14] to [16] above - but nothing turns on that oversight for present purposes).

25 Mr Boag also said that under a General Retailer (sub-agent) arrangement as proposed by Fairfax he would lose the benefit of the Retail Distributor Agreement and the Home Distributor Agreement. He would not be entitled to make home deliveries or to deliver the respondent's publications to retail outlets and, accordingly, would no longer be entitled to receive commission for those deliveries. Additionally, his overall commission, calculated under the three agreements would be reduced from 25 per cent to 12.5 per cent and the loss of the distribution business would also reduce the resale value of the newsagency.

26 In response to Mr Boag's claims, Mr Jordan referred to a number of occasions when Mr Boag advised Fairfax or prospective new subscribers that he did not wish to take on new home delivery customers for Fairfax publications. The examples given occurred in 2002 and 2004. Reference was also made to Mr Boag's repeated refusal to use "Connect", an electronic data interchange system used by Fairfax, to "interact" with Fairfax. The concerns of Fairfax as to this matter arose because the use of computer technology now forms the basis of information and data interchange between Fairfax and newsagents and the use of such facilities was part of the contract system put in place in 2000. It was said that the fees paid to newsagents comprise a base fee and a service fee of which 2 per cent of the commission related to using "Connect". Mr Jordan also said that:

In December 2005, I was of the view that Fairfax could increase its sales and circulation if it used a different operator willing to more actively promote and keep growing sales of publications in this territory. To achieve that end, it was decided to give Mr Boag 12 months notice of termination of his Contracts in accordance with the terms of those Contracts. Notice of termination was provided in a letter dated 16 December 2005. Exhibited to me at the time of swearing this affidavit and marked ‘LJ8’ is a copy of the letter

27 As to the meeting on 12 January 2006 Mr Jordan indicated that Fairfax arranged for an employee to be present and take notes of the meeting and a copy of those notes were annexed to his affidavit. Mr Jordan emphasised that during the meeting there was a discussion of customer complaints received in the past and specific reference was made to Mr Boag's failure to appoint sub-agents in the last five years. Mr Boag had said that he had not appointed any sub-agents because there was none available, there was simply nothing in the area. To this Mr Jordan responded:

None available? There’s countless cafes, kiosks and offices on Bourke Road alone - what about all of them? They’re in your territory aren’t they?

to which Mr Boag responded:

Yes but my home delivery run’s too large already.

28 Mr Jordan also said that at the meeting Mr Couzins said to Mr Boag words to the effect "You know, you could always sell the business" and that in response to this Mr Boag said words to the effect "I know, and me and my wife will be selling the business before the contract’s out but not because of this".

29 Significantly, in response to the summons for relief Mr Jordan deposed (emphasis supplied):

On 14 December 2006, I received a Summons for Relief , filed by the Newsagents Association of NSW and ACT Ltd (“the Association”) on behalf of Mr Boag. Among other things, Mr Boag is seeking, through the Association, to extend the notice provision in the Contracts to 24 or 36 months.

In the event that the Contracts were to remain on foot for either of those extended periods, I would be concerned about the impact this would have on Fairfax sales in Mr Boag’s territory. Given the number of new businesses and homes that have been built in the Alexandria area within the last 5 years, I am firmly of the view that Fairfax could noticeably increase its revenue and sales by having an agent in that area who is able to maximise the full potential of a rapidly changing area. By his own admission, Mr Boag was not doing that as he did not want to take on any additional deliveries.

I have sighted the affidavit of Mr Boag and note that he says that the commissions he earns from the sale of Fairfax publications under the Contracts is approximately 20% of his business. Fairfax has offered Mr Boag a sub-agency agreement whereby he would still be able to sell Fairfax publications as before. That would include, of course, the main publications, namely The Sydney Morning Herald, the Sun-Herald and The Financial Review.

In any event, in my experience, newsagents of this kind would typically have contracts with other suppliers such as Nationwide News Pty Ltd, NDD Distribution Ltd and Network Services, Gordon &Gotch, Pacific Publications. It is also quite likely that there would be a contract with Lotto/NSW Lotteries.

...

The parties to the Contracts have agreed to specific criteria which are to be taken into account for the issue of new contracts to a prospective purchaser upon the sale of a relevant newsagency. In my experience, where a business operated by a newsagent is sold, Fairfax will enter into new contracts with the prospective buyer of the same kind if the criteria agreed upon are satisfied. I am presently not aware of any reason why in the event of a sale of Mr Boag’s business, Fairfax would not be prepared to consider a prospective buyer on this basis.

(Presumably the last paragraph is a reference to the way in which clauses like clause 8.4 of the first contract are applied in practice).

30 In advancing his case for interim relief Mr Neil pointed out that the primary remedy sought in the substantive application was the variation of the three contracts to make a new regime for the termination of the contracts. Reference was made to paragraph 3 of part A in the summons, the respect in which the variation of the three contracts was sought. Further that:

By subparagraphs (a), (d) and (e) variations were sought which may cut off any right the respondent has to terminate the three contracts, whether on notice or otherwise. Importantly, having regard to the submissions my friend foreshadowed earlier today, it may be if made these variations would qualify the right to terminate the contract on notice, either as it presently stands or as it would be if the variation sought in (c) were made.

At the risk of labouring the point may we observe, if the variation at (a), (d) and (e) were to be made to the contract, none of the contracts could be terminated unless the conditions at subparagraph (a) and (d) had each been complied with, and they could not be terminated contrary to the provision at the variation at (e).

It will be the applicant's case at trial that, if the respondent's right to terminate the contract were to be so qualified, then in the circumstances of this case, there would be no basis to find it was likely the contracts, that the occasion or right to terminate the contracts would arise.

For present purposes our respectful submission is that the primary remedy here sought will become entirely ineffective once the contract is terminated.

31 Paragraph 3 of part A of the summons, which was referred to by Mr Neil, was in these terms:

3. An order varying the Newsagents Arrangement and any part thereof, including (but not limited to) the Agreements, in the following respects from its commencement or from such other time as the Court considers just in the circumstances of the case:

(a) Include a provision which has the effect that the Respondent would be prohibited from terminating, or from giving effect to a notice of termination of any or each of the Agreements unless and until the Respondent has:

i. provided Mr Boag with good and sufficient reasons in writing for the proposed termination, including (but not limited to) particulars of any changing circumstances and/or any aspects of the annual review processes set out in the Agreements as relied upon by the Respondent;

ii. used all reasonable endeavours to settle the dispute in accordance with the dispute resolution procedures set out in the Agreements upon any notification from Mr Boag that a dispute has arisen under any or each of the Agreements relating to the proposed termination; and

iii. otherwise genuinely engaged in prior consultation with Mr Boag in relation to the proposed termination and the reasons therefore, and the consequences thereof.

(b) In the event that the Respondent terminates any or each of the Agreements in contravention of the provision in Order 3(a), include a provision which has the effect of requiring the Respondent to:

i. restore or reinstate any or each of the Agreements so terminated; or

ii. in the alternative, compensate Mr Boag for the loss of the business of the sale, retail distribution and home delivery of the Respondent’s publications pursuant to the Agreements by paying Mr Boag an amount reflecting the goodwill of such business.

(c) Include a provision which has the effect that the Respondent would be required to give Mr Boag at least thirty-six (36), or in the alternative twenty-four (24), months notice of the termination of any or each of the Agreements, or by paying Mr Boag not less than the sum of money in lieu of such notice equivalent to the value of Mr Boag’s total remuneration derived from any or each of the Agreements for that period, in all circumstances other than for fundamental and serious breach of those agreements by Mr Boag.

(d) Include a provision which has the effect that the Respondent undertakes in good faith to use all reasonable endeavours to settle disputes with Mr Boag in accordance with the dispute resolution procedures set out in the respective Agreements, including (but not limited to) disputes relating to the exercise of the Respondent’s alleged contractual rights to terminate the Agreements.

(e) Include terms which have the effect of requiring the Respondent to:

i. act towards Mr Boag fairly and in good faith, including in relation to the termination of those Agreements;

ii. be good and considerate towards Mr Boag, including in relation to the termination of those Agreements; and

iii. refrain from exercising any of its discretions under the Agreements, including those relating to the termination of those Agreements, capriciously or in bad faith, or in a way that is irrational or perverse, or arbitrarily and for a collateral purpose.

32 Reference was also made to the difficulty that the applicant would have, if the contracts were to be terminated, in persuading the Court it had jurisdiction to make an order which would have the effect of restoring a contract which had ceased to have any effect; that is, creating a new relationship where the old one ceased. In the circumstances where the remedy of variation would for practical purposes become ineffective once the contracts were terminated, it was submitted the applicant easily met the test for the exercise of the Court's jurisdiction to make the interlocutory orders sought.

33 Mr Neil submitted in the alternative, should the Court be persuaded as determinative the fact that as an alternative and secondary claim the applicant applied for a money order, the difficulty of assessing the amount of such money order in this case was significant. The task required in assessment, assuming the applicant were successful on liability securing the orders for the variations sought, would be to assess not how much the applicant would have earned during the period of notice, but to assess the value of the contracts to Mr Boag having regard to a valuation as to the likelihood or otherwise that the respondent would have been in a position to exercise a qualified right of termination such that it would then have. That task of assessment is particularly difficult and, as Haylen J held in Sea Acres Rainforest Centre Pty Ltd v New South Wales (2001) 109 IR 56, the difficulty of the making of such assessment is a consideration which dictates against refusing interlocutory relief even when it is thought the availability of a money order is not a decisive situation.

34 As to the assessment of the balance of convenience, Senior Counsel submitted that the evidence is effectively all one way; if the contracts are allowed to come to an end, then that will be the end of the matter as far as those contracts are concerned for practical purposes, although (without formally conceding the issue) the Court would be left with a money order as the only measure or means of affording relief. On the other hand, the respondent points to no real prejudice if the contracts remain on foot pending hearing of the final applications. Senior Counsel also submitted that the respondent's reliance on the applicant's alleged delay was not made out.

35 Fairfax strongly contested the applicant's claim for interlocutory relief. Emphasis was placed on the terms of the contracts by which Mr Boag was appointed as agent for the respondent to inter alia: (i) provide home delivery to customers of various Fairfax publications; (ii) supply various Fairfax publications to retail outlets in a specific territory; and (iii) sell Fairfax publications at his newsagency to his customers.

36 Fairfax relied on the consideration that, as an appointed agent, Mr Boag did not purchase or acquire any business or part of any business from the respondent; and that he was remunerated by way of commission for sales arising from the performance of the three contracts. Important to the respondent's case was that the contracts were formulated after lengthy discussions and negotiations as to their terms between Fairfax and various organisations representing newsagents nationally; the contracts were not simply drafted by one party without any input from newsagents or their representatives. Further, the contracts were not for the sole benefit of Mr Boag (and by that it is assumed Fairfax relies on the basic mutuality of the arrangements between itself and Mr Boag, and presumably other newsagents in a similar situation to Mr Boag).

37 Further, in terminating the contracts, Fairfax relied upon its right from 1 February 2004 to give at least 12 months' notice of termination of the contracts, which it did by notice dated 16 December 2005. Fairfax had the right to choose the agents which in its judgment were best suited to further its business interests. There was nothing in the nature of the contract or the relationship which created an indefinite term, or the right for Mr Boag to choose the terms solely to suit his needs or wishes.

38 Similarly Mr Boag did not have the unilateral right to transfer or assign the contracts to third parties, the parties agreed to specific criteria which were to be taken into account for the issue of new contracts to a prospective purchaser upon the sale of the relevant newsagency.

39 The respondent noted that the contracts, by reason of the validly given notice, were to terminate on 18 December 2006 and accordingly an order seeking to restrain the respondent from terminating the contracts could not be made because termination would result, as a matter of law, by reason of the notices given and the agreed extended periods of notice: Birrell v Australian National Airlines Commission (1984) 5 FCR 447 at 457; TAB Agents' Association of NSW v TAB Limited [2003] NSWIRComm 316 at [43] to [59] (and see the Full Bench decision in that case at (2004) 136 IR 45 at [8]); Kenoss Contractors Pty Ltd v Allied Constructions Pty Limited (2001) 104 IR 66.

40 Fairfax also relied heavily upon the delay in the applicant and Mr Boag seeking relief: towards the very end of the contract and the last day of the law term, relief was sought and only because of the necessity of allowing the respondent an opportunity to properly respond to the application it was agreed that the notice be extended to 21 December 2006 and subsequently further extended to 28 December 2006 to enable the Court to deal with the matter.

41 Fairfax also emphasised that the Court should in its general discretion decline to grant relief in circumstances where a lengthy period of notice was given and there was thus ample opportunity for the applicant and/or Mr Boag to approach the Court earlier for appropriate relief; and there was no satisfactory explanation for the serious delay in bringing the application.

42 The respondent also contended that there was no sound basis for granting the relief claimed because:

(i) It cannot be seriously argued that 12 months' notice is unfair.

(ii) Mr Boag operates a newsagency which sells a range of publications. He has a range of supply contracts from other suppliers. The loss of the contracts do not deprive Mr Boag of his business.

(iii) Moreover, the loss of contracts does not deprive Mr Boag of having Fairfax publications for sale in his newsagency. He has been offered a contract to secure that result in December 2005, and again prior to the expiry of the notices. He will not lose the ability to offer relevant publications to the public (compare paragraph 16 of his first Affidavit).

(iv) Contrary to what he has stated in his Affidavit of 14 December 2006, namely that the goodwill in the business will be reduced, there is no basis for concluding on an interlocutory stage that if he chooses to sell the business (as he states he intends to do at some future date) that it cannot be offered for sale on the basis that the respondent will grant a suitable prospective purchaser one or more of the contracts previously held by Mr Boag.

(v) By retaining the right to offer all relevant publications to the public, and on the basis that a suitable purchaser may well, if it meets the criteria, be able to obtain the relevant contracts, it is difficult to conclude that Mr Boag will not be able to sell his newsagency or that the sale will be in any significant way compromised.

(vi) Relief should not be granted to in effect accommodate a sale date which simply suits the Boags (compare paragraph 16 of his first Affidavit).

43 It was also emphasised that damages were an adequate remedy for Mr Boag's claims, if they were made out: there was a firm basis for holding that it was not necessary to grant interlocutory relief (the Court having only a very limited jurisdiction to preserve the subject matter of the litigation) because if a case could ultimately be made out by Mr Boag, and the contract is varied, the Court would be able to grant compensation by payment of money in connection with any contract or arrangement so varied pursuant to s 106(5) of the Act: compare Kenoss Contractors at [38]

44 Thus, Fairfax submitted, that neither the applicant nor Mr Boag had made out a case that the compensation would not be an adequate remedy. Further, it could not be said that on the material presented by Mr Boag that there were sound reasons for concluding that it would not be just ultimately if Mr Boag's relief was confined to the remedy of compensation. Similarly, there was no basis for saying that the Court would be "denuded of its capacity to make effective final orders".

45 The conceptual foundation of the applicant's response to the respondent's approach relied upon the reasoning of Haylen J in Sweeney & Vandeleur Pty Ltd v Angyl (2003) 136 IR 433 at 441 - 447. The applicant submitted that the relevant question as to the scope of the Court's power to grant interlocutory relief in this context was: "is it just in all the circumstances that the plaintiff be confined to his remedy in damages?" (Sweeney at 445 [26]) This was because the Court's broad capacity to re-write contracts and arrangements and to create new rights under s 106 would be stripped of much of its effectiveness if unfair contracts were allowed to be terminated leaving only a power to declare the contract void and to make money orders as compensation: Sweeney at 445 [26] and 446 [29].

46 The applicant thus submitted that the scope of the Court's power to grant interlocutory relief in relation to making orders under s 106 extended to restraining a party from terminating a contract in circumstances where, unless the order was made, any final order would be rendered less effective or the Court's processes would be thwarted: Selman v Sweet [2003] NSWIRComm 14 at [14]; Kenoss Contractors at [20] and [42] - [43].

Principles to be applied

47 A feature of the submissions of both parties in the proceedings was to point to the divergence of authority to grant relief such as that sought in the present proceedings. Unsurprisingly the applicant relied upon those authorities (such as Sea Acres Rainforest Centre Pty Ltd v New South Wales (2001) 109 IR 56 at [49] - [50]; Selman v Sweet [2003] NSWIRComm 14 at [14]; Sweeney & Vandeleur Pty Ltd v Angyl (2003) 136 IR 433 at 441 - 447; Western Sydney Area Health Service v Australian Salaried Medical Officers' Federation (NSW) (2004) 138 IR 203 at 209 [30]; and Gough & Gilmour Holdings Pty Ltd v Caterpillar of Australia Ltd (No 9) [2001] NSWIRComm 260) which took a broad view of the Court's authority to grant interlocutory relief of the kind sought in the present proceedings. Similarly unsurprising was the respondent's reliance on those authorities (such as TAB Agents' Association of NSW v TAB Limited [2003] NSWIRComm 316 at [43] to [59] and Kenoss Contractors Pty Ltd v Allied Constructions Pty Limited (2001) 104 IR 66, and also the authorities relied upon in those judgments) which took a narrower or more restrictive view as to the Court's powers in relevant respects.

48 Because of the way in which the submissions were developed it is important to particularly refer to one aspect of the applicant's submissions. This aspect involves reliance upon the judgment of Watson J in Elliott v Royal Motor Yacht Club of New South Wales, Newcastle Branch (1988) 42 IR 35 at 36, which is referred to in Kenoss Contractors at 72 (para [20]). Watson J in that case said (emphasis supplied):

What is sought, simply put, is an interlocutory order under s 88F. It is unnecessary to discuss as a matter of power the Mareva injunction cases which turn on the frustration of any proceedings before the Commission if such an order were not made. This, in my view, is a different situation where what the applicant is seeking is an interim order under s 88F(1) varying the contract pending determination of the application finally.

In my view there is jurisdiction to make such an interim order if a sufficient case is made out so that a preliminary finding can be made that there is unfairness - whereby the Commission is satisfied that there is sufficient foundation for some interim order to be made.

49 I consider that it is also pertinent to refer to those parts of some of the authorities relied upon which seek to reconcile at least some of the divergences in the approaches adopted by first instance judges in this area. In this regard see, for example, Sea Acres at 68 - 71 and Kenoss Contractors at 82. The approach which should be taken in this matter is that the Court should proceed on the basis that there is jurisdiction to make the interlocutory order or orders sought and to factor into account the divergence of opinion (earlier referred to) as an important consideration in dealing with the balance of convenience aspect of the matter. The reasons for taking that course will be set out shortly.

50 However, before specifically doing that, I should indicate the relevance of the approach to be adopted in the grant of interlocutory proceedings and how jurisdictional issues may be factored into the discretionary considerations where relevant. As I observed in Kenoss Contractors (at 75) I do not consider that any different approach is required in respect of jurisdictional issues to the general approach to be adopted to interlocutory interim relief generally:

That is, it is necessary for the applicant to show that there is a serious question to be tried and the balance of convenience favours the grant of the relief. Usually any jurisdictional issues are to be dealt with in the first area, although in some cases they may also be relevant to the second: see Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148 at 153 - 155, where it was held that in some, albeit rare, cases it will be relevant to assess the strength of a plaintiff’s case in dealing with the balance of convenience.

51 The conclusion reached earlier was for the following reasons. First, it is inappropriate to attempt to resolve in a definitive way a major jurisdictional issue as to the power of the Court in proceedings which have to be decided with the urgency that these proceedings need to be dealt with. Second, this is especially so where in some of the cases (particularly Kenoss Contractors) which took a narrower view of the relevant power, some of the cases which took a broader view were distinguished on a particular basis which is not relevant here. For example, in Kenoss Contractors (at 82, para [42]) there was reference to "the only way in which it is presently possible for [Maidment J's approach in Teletech International Pty Ltd v Medical Benefits Fund of Australia Ltd (No 1) (unreported, 28 September 1998)] to be reconciled with that in Gibson [Gibson v Western Sydney Area Health Service [2000] NSWIRComm 13] is where the subject contract is on foot, or has been terminated recently, or perhaps in other circumstances where it might be just and equitable or otherwise available, to treat the contract as if still on foot".

52 Similarly, later in Kenoss Contractors at 82 (para [43]) a similar approach was taken in distinguishing the judgment of Watson J in Elliott v Royal Motor Yacht Club of New South Wales, Newcastle Branch (1988) 42 IR 35 at 36. Again, that case was distinguished on the basis that the approach of Watson J in Elliott depended upon the holding that there may be circumstances where an interim order might be made pursuant to the then applicable provision (at that time s 88F of the Industrial Arbitration Act 1940), "where further unfairness will or may occur, but for the making of the interim order ... Again, the conceptual basis upon which that case has possible relevance to the present would only exist if the contract the subject of the s 106 application was on foot".

53 These considerations lead to the third reason. It is appropriate to approach this matter, at least in a preliminary way as to jurisdiction, on the basis that the contract between the parties is still on foot. Certainly, the contract or arrangement between the parties was on foot at the commencement of proceedings and as Mason J observed in R v Dunphy and ors; Ex parte Maynes and ors (1978) 139 CLR 482 at 495, "[i]n general the order of a court speaks as to the rights of the parties as at the commencement of the proceedings in which the order is made". I consider his Honour's approach is in point here noting however that in R v Dunphy his Honour distinguished that general proposition in the case before him when his Honour held that there were strong reasons why declarations made under s 140 of the then Conciliation and Arbitration Act 1904 (Cth) should be held to stand in a different position. That point of distinction does not seem to me to apply to proceedings under s 106 of the Industrial Relations Act at least in terms of the power to make orders. I consider this results not only from Mason J's observations as to the general situation as to the orders of courts but also from the wide terms of s 106, particularly sub-section (3) thereof, which empowers the Court to declare a contract (as broadly defined by s 105) "wholly or partly void, or varied, either from the commencement of the contract or from some other time".

54 Any doubt as to the contract at issue in these proceedings being relevantly on foot is removed by the agreement of the parties to extend the operation of the contract initially to 21 December and then subsequently to 28 December 2006. In referring to the agreement of the parties to extend the contract I should make clear that the significance of that extension is not so much that it occurred by agreement but the fact that an extension occurred while the contract was on foot. Indeed, if an agreement had not been reached by the parties I have no doubt that the power to make an order in similar terms to the parties' agreement could have been made by the Court as part of the Court's implied power to preserve and protect its process and procedures in respect of proceedings before it.

55 Finally, and for these reasons, it is therefore appropriate to deal with the present application on the basis that there is jurisdiction to make the interlocutory orders sought by the applicant. Because of the approach that I consider should be taken this means that either prayer 1 or the additional prayer 1A (added by amendment) could be made in these proceedings should it otherwise be appropriate for such relief to be granted.

Conclusions

56 The approach appropriate, as earlier noted, is that referred to in Kenoss Contractors at 75 by reference to the approach of Mason ACJ in Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148. Having regard to that approach which is conveniently extracted at para [50] above, I should indicate one area of disagreement that I have with the approach of Watson J in Elliott. It will be recalled that his Honour held that there was jurisdiction to make an interim order varying the contract pending a final determination of the application, the jurisdiction to do so depending upon "a sufficient case" being made out "so that a preliminary finding can be made that there is unfairness". It seems that his Honour was referring to "unfairness" in terms of the then s 88F being made out on a prima facie basis. If that is what his Honour intended by those observations, I respectfully disagree with them. It seems to me the test for interlocutory relief is placed at too high a level. It is to be recalled that when Mason ACJ dealt with the Castlemaine Tooheys case, his Honour referred to the controversy at the time as to whether the plaintiff seeking interlocutory relief had to establish a "prima facie case" or merely that there was demonstrated a "serious question to be tried", and his Honour held that it was the latter formulation that was appropriate. I do not consider that there is any basis whereby, when a case is otherwise made out for the making of an interim order varying a contract, any different test should be applied other than the "serious question to be tried" test.

57 There is also another consideration which I raised with the parties during argument, which is also relevant even at this stage of the proceedings. It is the mandate in s 109(1) which requires the Court to "endeavour, by all means it considers appropriate and necessary, to settle a matter under this Division [which includes s 106 proceedings] by conciliation". This provision has a number of consequences for the present stage of these proceedings. First, it serves to confirm the "serious question to be tried" approach as being more appropriate then the "prima facie case" test at the interlocutory stage, since the Court would be most cautious when dealing with applications for interlocutory relief, about making findings which could affect its capacity to settle a proceeding under s 106 by conciliation, accepting that in some cases there may be no alternative but to make findings which could have that effect.

58 Second, it is appropriate to factor the requirement expressed in s 109(1) in considering the balance of convenience particularly where, as in this case, I consider it is finely balanced.

59 I should here deal with two other matters. That is the question of damages as an adequate remedy and the question of delay. As to the former matter, I have considerable doubts as to the correctness of the applicant's contentions in this regard, although I consider it is on firmer ground when it relies on the difficulty of assessment which would follow from any failure to obtain interlocutory relief and the consequent cessation of the contractual arrangements currently between Mr Boag and the respondent.

60 As to the issue of delay, it can be properly found that there has been significant delay on the part of the applicant in bringing these proceedings and that that delay has been largely unexplained. The issue of delay has often been a matter of significant contest in proceedings under s 106 and its statutory predecessors. At one stage there was a view that the doctrine of laches applied in these proceedings but that view was decisively and correctly put to rest by Marks J in Howitt v Retec Limited (No 2) (1995) 60 IR 93 at 99 and following. Certainly as his Honour found subsequently in that case the issue of delay may give rise to the Court considering whether the delay was such that the proceedings before the Court could not be conducted fairly and thus whether and to what extent the power of the Court to either stay, permanently or temporarily, or strike out any process, for example, as an abuse of process, should be exercised. Somewhat hesitantly, I consider that the delay here although of some significance was not such as to deprive the applicant or Mr Boag of the limited interlocutory relief which it is proposed to grant.

61 I reach a similar conclusion on the issue of the adequacy of damages issue. As earlier noted, I am not wholly convinced of the applicant's approach in this regard, except on the issue of assessment of damages. However, the finding made is in my view sufficient to warrant the limited interlocutory relief that will be granted. I do not consider the findings made on these two issues and on the jurisdictional question tell against the balance of convenience as to the limited relief later referred to.

62 Before dealing finally with the issue of balance of convenience, I should briefly return to the approach in Castlemaine Tooheys. In terms of that approach and having regard to the finding earlier made on jurisdiction, I should state that I consider that the applicant has demonstrated that there is a serious question to be tried in the proceedings and that the determination of the present application will, as foreshadowed, depend on the issue of balance of convenience.

63 In that context, there was a significant debate between the parties as to the extent of prejudice that could be visited on the respondent by the granting of interlocutory relief. My preliminary finding on that issue is that, at present and in the short term, there is not a great deal of prejudice arising to the respondent from the grant of interlocutory relief but that the extent of detriment it may suffer from the grant of such relief may well, having regard to considerations to which I shall turn shortly, accumulate to tip the balance of convenience in the respondent's favour. The matters which I consider relevant in this respect include the concern (which I find is understandable and made out) that the respondent wishes not only to have what it considers more suitable personnel "in charge of" the relevant territory but to have personnel in that territory who are more likely to be able to assist it to "grow" its business there. Having regard to the present time of the year, I do not consider that there will be significant detriment to the respondent by interim orders being made for a short time but such detriment would very likely accrue or increase if orders were made with the duration sought by the applicant.

64 Therefore, having regard to the significance of s 109(1), as earlier discussed, the appropriate interlocutory order to be made is that orders similar to those sought by the applicant should be made but limited in their duration to apply only until the matter has been adequately conciliated pursuant to s 109 of the Industrial Relations Act. This of course would be on the basis that the conciliation of the matter would be greatly expedited such that it could be heard either by a duty judge during the current law vacation or by a judge in the early part of the new Law Term. When I refer to "adequately conciliated", this would involve a value judgment by the judge conducting the conciliation that both parties have genuinely attempted to conciliate the matter and that a certificate of unsuccessful conciliation would not be issued unless and until the relevant value judgment had been formed.

Orders

65 I therefore find that the applicant has made out a case for limited interlocutory relief to be granted in terms earlier discussed in these reasons. Such orders will remain in force only until the adequate conciliation of the matter (a question also earlier discussed). Orders should be made to expedite the conciliation of these proceedings pursuant to s 109, subject to adequate time being available for the parties to prepare themselves for the conciliation. The Court is prepared to fix a time and date for conciliation either before a duty judge during the current vacation or before a judge early in the new Law Term.

66 The Court formally orders that the proceedings stand adjourned until the parties have had an opportunity to consider these reasons and to prepare short minutes of order. If that cannot occur today the parties will need to address the Court today as to whether an extension of the agreement reached between them on 21 December should occur either by agreement or by order of the Court. The costs of the proceedings to date are reserved.

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LAST UPDATED: 29/12/2006